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NEEDHAM, Mass .– (BUSINESS WIRE) – Businesses and organizations in all industries are increasing their investments in Artificial Intelligence (AI) to gain competitive advantage through improved customer insights, higher employee efficiency and accelerated innovation. The new Worldwide Artificial Intelligence Spending Guide from the International Data Corporation (IDC) predicts that global spending on AI systems will increase from $ 85.3 billion in 2021 to more than $ 204 billion in 2025. The average annual growth rate (CAGR) for the period 2021-2025 will be 24.5%.

“The disruption from the global pandemic was worrying, but it is also serving as a catalyst for innovation, growth and business transformation,” said Ritu Jyoti, group vice president, Artificial Intelligence and Automation Research, IDC’s software research and advisory practice. “Today, AI expertise is more focused on developing commercial applications that optimize efficiency in existing industries. The acceleration of the adoption of AI and the proliferation of intelligent, intuitive ML / DL algorithms will fuel the creation of new industries and lines of business and, overall, new opportunities for business monetization. ”

Retail and banking are the two industries that will spend the most on AI solutions over the forecast period of five years, with retail spending growing slightly faster. Retail AI spending will mainly focus on solutions that improve the customer experience through automated customer service and recommendation engines. The banking industry will dedicate a large part of its AI investments to risk mitigation through automated threat and fraud analysis applications. The third largest AI spending industry, Discrete Manufacturing, will invest primarily in quality management and automated preventive maintenance solutions. In terms of spending growth, all 19 industries in the spending guide are expected to have Average Annual Growth Rates (CAGRs) greater than 20% over the forecast period 2021-2025.

A graph showing the percentage of global spending on AI solutions in 2021 can be found in this press release on IDC.com.

The two biggest use cases in terms of total spend across all industries are automated customer service agents and sales process recommendation and automation. Together, these two use cases will account for $ 15.9 billion, or more than 18% of all AI spending this year. Although this shows a cross-industry focus on a better customer experience, the use of the solutions will differ from industry to industry. For example, federal and central governments will use AI solutions to help citizens find the most appropriate government service, while retailers will focus on helping shoppers identify additional items to purchase.

The next five use cases were tightly bundled this year with just over $ 5 billion in spending – IT optimization; Automated threat intelligence and prevention systems; Program advisors and recommendation systems; Fraud analysis and investigation; and automated preventive maintenance. Similar to AI spending by industry, all 27 AI use cases in the Spending Guide are expected to have a CAGR of more than 20% over the five-year forecast period.

“In addition to the customer experience, many AI investments are aimed at improving efficiency. IDC believes these implementations will move toward developing and improving new business models, ”said Mike Glennon, senior research manager for IDC’s Customer Insights & Analysis team. “New ways of doing business will fundamentally transform the way companies interact with their customers and encourage new players in many industries. We have seen dramatic changes in retailing with companies like Alibaba and Amazon, and other industries will follow as they discover how them to do this.” can benefit from changes in how AI does business. AI will have an impact in all phases of business, from customer interaction to improving the supply chain to creating new and still-to-be-thought services. ”

Software will be the leading technology company, accounting for more than half of all spending on AI solutions as of the forecast. The largest areas of investment will be AI applications and AI development and deployment software, while AI lifecycle software will see the fastest spending growth with a 5-year CAGR of 40.7%. A quarter of all AI expenditures go into services with IT services, the total expenditures of which are similar to those for AI applications. Hardware spending is dominated by server purchases.

Geographically, the United States will provide more than half of all AI spending throughout the forecast, led by the retail and banking industries. Western Europe will be the second largest geographic region, led by banking, retail and discrete manufacturing. China will be the third largest region for AI spending, with state / local governments, banking, and process manufacturing being the leading industries. The strongest growth in spending over the five-year forecast will be in Western Europe (26.9% CAGR) and Asia / Pacific (excluding Japan and China) (25.1% CAGR).

The Worldwide Artificial Intelligence Spending Guide quantifies spending on technologies that analyze, organize, access, and deliver advisory services based on a range of unstructured information. The Spending Guide quantifies AI opportunity by providing data for 27 use cases across 19 industries in nine regions and 32 countries. Data is also available for the appropriate categories of hardware, software, and services.

Via IDC spending guides

IDC’s Spending Guides provide a detailed overview of the most important technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are provided via pivot table format or a custom query tool so that the user can easily extract meaningful information about each market by viewing data trends and relationships.

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About IDC

International Data Corporation (IDC) is the leading global provider of market intelligence, advisory services, and events to the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional and local know-how on technology, IT benchmarking and sourcing as well as industry opportunities and trends in over 110 countries. IDC’s analytics and insights help IT professionals, executives, and the investment community make fact-based technology decisions and meet their key business goals. Founded in 1964, IDC is a wholly-owned subsidiary of the International Data Group (IDG), the world’s leading technical media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC blog for industry news and insights.